Oman's progress up BMI’s ratings table was halted this quarter on the back of heightened political and industry risks from the social unrest in the Middle East and North Africa region. But with relative peace returning to the country, we expect the long term impact of the crisis to be minimal. Our analysis and forecast in this quarter's report is based on regulatory and operator data for the final quarter of 2010. Meanwhile, this quarter's update sees the introduction of our five year mobile ARPU forecast. Our ARPU forecast is based on market data published by second mobile operator Nawras, which accounts for about 44.1% share of the mobile market.

Based on the latest data, it appears Oman had 1.847mn 3G subscribers at the end of 2010, equivalent to 40.5% of the entire mobile customer base. Meanwhile, in the fourth quarter of 2010, the mobile subscriber market grew by just 0.8%, according to
the regulator. This was one of the slowest growth quarters ever recorded for Oman’s mobile market. BMI believes that one reason for the slow growth in Q410 was the impact a switch-off period for inactive customers would begin to be felt in the operators’ results for Q310. Although Oman’s mobile operators had not published subscriber data at the time of writing, BMI suspects at least one of them experienced negative growth in the fourth quarter of the year.

Meanwhile, in this latest update, we lowered our estimate for the number of mobile broadband subscribers. These are customers who use a 3G-enabled mobile device or USB stick to access the internet. Media reports suggested national incumbent operator Omantel had 156,000 mobile broadband subscribers on its network at the end of September 2010. Considering that alterative operator Nawras introduced its mobile broadband offering before Omantel, Nawras is understood to have an even higher number of mobile broadband subscribers on its network. BMI estimates Oman had about 388,000 mobile broadband subscribers at the end of 2010. This figure was equivalent to 89.5% of the entire broadband market.

Accounting for fixed and mobile broadband subscribers, we estimate Oman had a penetration rate of more than 15% at the end of 2010. We expect the growth of mobile broadband services to contribute to weaker growth in demand for fixed broadband alternatives. Omantel already experienced a slowdown in demand for its xDSL service. However, we note the launch of WiMAX-based broadband services by the Nawras network increased the competitiveness of the fixed broadband sector and should help stimulate further growth. Described as a Plug 'n' Play solution, Nawras’ home broadband service is based on WiMAX technology in the local loop, but supported by a national fibre-optic backbone. The Nawras Home Broadband & Voice allows customers to set up internet access at download speeds of up to 1Mbps.
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